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Questions and Answers: Chelsea leasehold conveyancing

I’m about to sell my garden flat in Chelsea.Conveyancing is yet to be initiated but I have just received a yearly service charge demand – should I leave it to the buyer to sort out?

It best that you clear the service charge as normal because all ground rent and service charges will be apportioned on completion, so you will be reimbursed by the buyer for the period running from after the completion date to the next payment date. Most management companies will not acknowledge the buyer unless the service charges have been paid and are up to date so it is important for both buyer and seller for the seller to show that they are up to date. Having a clear account will assist your cause and will leave you no worse off financially.

I am hoping to put an offer on a small detached house that appears to tick a lot of boxes, at a reasonable figure which is making it all the more appealing. I have subsequently found out that it's a leasehold as opposed to freehold. I am assuming that there are issues buying a house with a leasehold title in Chelsea. Conveyancing solicitors have are soon to be appointed. Will they explain the issues?

Most houses in Chelsea are freehold rather than leasehold. In this scenario it’s worth having a local conveyancer used to dealing with such properties who can assist with the conveyancing process. We note that you are buying in Chelsea so you should seriously consider looking for a Chelsea conveyancing practitioner and check that they have experience in transacting on leasehold houses. As a matter of priority you will need to check the number of years remaining. As a tenant you will not be entirely free to do whatever you want with the house. The lease will likely included provisions such as obtaining the landlord’sconsent to carry out alterations. It may be necessary to pay a service charge towards the maintenance of the communal areas where the house is located on an estate. Your conveyancer will report to you on the legal implications.

Last month I purchased a leasehold property in Chelsea. Am I liable to pay service charges relating to a period prior to my ownership?

In a situation where the service charge has already been demanded from the previous owner and they have not paid you would not usually be personally liable for the arrears. However, your landlord may still be able to take action to forfeit the lease. It is an essential part of leasehold conveyancing for your conveyancer to ensure to have an up to date clear service charge receipt before completion of your purchase. If you have a mortgage this is likely to be a requirement of your lender.

If you purchase part way through an accounting year you may be liable for charges not yet demanded even if they relate to a period prior to your purchase. In such circumstances your conveyancer would normally arrange for the seller to set aside some money to cover their part of the period (usually called a service charge retention).

I am a negotiator for a long established estate agency in Chelsea where we have witnessed a number of leasehold sales derailed as a result of short leases. I have been given conflicting advice from local Chelsea conveyancing solicitors. Can you clarify whether the vendor of a flat can commence the lease extension process for the buyer?

Provided that the seller has owned the lease for at least 2 years it is possible, to serve a Section 42 notice to commence the lease extension process and assign the benefit of the notice to the purchaser. This means that the buyer need not have to sit tight for 2 years to extend their lease. Both sets of lawyers will agree to form of assignment. The assignment has to be done prior to, or simultaneously with completion of the disposal of the property.

An alternative approach is to extend the lease informally by agreement with the landlord either before or after the sale. If you are informally negotiating there are no rules and so you cannot insist on the landlord agreeing to grant an extension or transferring the benefit of an agreement to the buyer.

Can you provide any top tips for leasehold conveyancing in Chelsea with the intention of saving time on the sale process?

  • Much of the frustration in leasehold conveyancing in Chelsea can be reduced if you instruct lawyers the minute your agents start marketing the property and request that they start to put together the leasehold information which will be required by the purchasers’ solicitors.
  • The majority freeholders or managing agents in Chelsea levy fees for supplying management packs for a leasehold homes. You or your lawyers should find out the fee that they propose to charge. The management information sought as soon as you have a buyer, thus accelerating the process. The average time it takes to receive management information is three weeks. It is the most frequent cause of delay in leasehold conveyancing in Chelsea.
  • If there is a history of any disputes with your freeholder or managing agents it is very important that these are settled before the property is marketed. The buyers and their solicitors will be concerned about purchasing a flat where there is a current dispute. You may need to swallow your pride and discharge any arrears of service charge or settle the dispute prior to completion of the sale. It is therefore preferable to have any dispute settled prior to the contract papers being issued to the buyers’ solicitors. You will still have to reveal details of the dispute to the purchasers, but it is better to present the dispute as historic as opposed to unsettled.
  • If you hold a share in a the Management Company, you should make sure that you hold the original share certificate. Organising a replacement share certificate can be a lengthy process and slows down many a Chelsea conveyancing transaction. If a duplicate share certificate is needed, do contact the company director and secretary or managing agents (where applicable) for this sooner rather than later.
  • You believe that you know the number of years remaining on your lease but it would be advisable double-check via your conveyancers. A purchaser's lawyer will be unlikely to recommend their client to proceed with the purchase of a leasehold property the remaining number of years is below 80 years. In the circumstances it is important at an early stage that you identify whether the lease requires a lease extension. If it does, contact your solicitors before you put your premises on the market for sale.

  • I am the registered owner of a second floor flat in Chelsea. In the absence of agreement between myself and the freeholder, can the Leasehold valuation Tribunal determine the amount due for the purchase of the freehold?

    if there is a missing freeholder or if there is dispute about what the lease extension should cost, under the Leasehold Reform, Housing and Urban Development Act 1993 it is possible to make an application to the First-tier Tribunal (Property Chamber) to assess the price payable.

    An example of a Lease Extension case for a Chelsea property is 150A Albert Palace Mansions Lurline Gardens in July 2013. The Tribunal determined that the premium payable for the new lease of the subject property was £42,069 This case was in relation to 1 flat. The remaining number of years on the lease was 57.06 years.

    Other Topics

    Lease Extensions in Chelsea